Friday, October 6, 2017

The Global Shale Law Compendium series
addresses legal developments and other issues related to the governance of
shale oil and gas activities in various countries and regions of the world. In
this article, we will highlight governance actions taken by some of the states
and Federal territory in southeastern Australia to develop policies specific to
shale gas development. Another article will address shale gas development in
additional Australian states.

In a report dated September 2015,
the U.S. EIA declared that “with geologic and industry conditions resembling
those of the USA and Canada, Australia has the potential to be one of the next
countries with commercially viable shale gas and shale oil production.” According
to the U.S. EIA, Australia holds approximately 437 Tcf of technically
recoverable shale gas resources, mostly occurring in Western Australia, South
Australia and Queensland. Other Australian states and Federal territory,
including New South Wales, Victoria, Tasmania and Northern Territory may possess
promising shale gas prospects, though such resources have yet to be proven.

New South Wales

In
March 2012, the New South Wales (NSW) government prohibited the use of BTEX
chemical compounds in all drilling and hydraulic fracturing activities and also
required the disclosure of all chemical fluids used in hydraulic fracturing. Although
the NSW government has declared that “there are no proven shale gas reserves in
NSW,” it appears to not be opposed to the idea of developing such resources.

Indeed,
on September 30, 2014, the NSW Chief Scientist & Engineer issued a Final Report on the Independent Review of Coal Seam
Gas (CSG) Activities in NSW and provided some
recommendations to the NSW government in terms of how to effectively respond to
the impacts of existing CSG activities on the environment and public health. As
part of its findings, interestingly, the Chief Scientist & Engineer
recommended that a standing expert advisory body on CSG activities be established,
one of whose important functions would be to advise on whether or not other
unconventional gas extraction activities, including shale gas, should be
allowed to proceed in NSW.

In
the NSW Gas Plan, the Government also
pointed out the importance to reform the existing hydrocarbon regulatory
framework in order to ensure that all gas activities, including shale gas, hold
an Environmental Protection License granted by the Environment Protection
Authority (EPA).

Victoria

On
August 24, 2012, the Victorian Coalition Government announced reforms to strengthen
the existing CSG regulation and further protect regional communities. The government
declared an immediate ban on onshore gas exploration activities using hydraulic
fracturing or any work programs involving the said technique until the
Coalition Government agreed on reform proposals. Minister for Energy and
Resources Honorable Michael O’Brien stated that “this approach will help to
avoid a situation where applications for hydraulic fracturing works might be
approved now, only to be inconsistent with new standards to be set in the near
future.”

In
addition, on May 28, 2014, Minister for Energy and Resources Honorable Russell
Northe expanded the moratorium to include all onshore gas exploration
activities regardless of whether or not they involved the use of hydraulic
fracturing. On August 30, 2016, following the enactment of the 2016 Resources
Legislation Amendment Bill, Premier of Victoria Honorable Daniel Andrews announced a permanent ban on all
onshore unconventional gas exploration and development, including through the
use of hydraulic fracturing and coal seam gas development. Premier Andrews also announced the extension
of the moratorium on conventional onshore gas exploration and development to
June 30, 2020.

Tasmania

In
March 2014, the Tasmanian government put in place a 12-month moratorium on the
practice of hydraulic fracturing in unconventional reservoirs until a further
review was conducted on the impacts of said technique on the environment and
the community as well as a review of the existing oil and gas regulatory
framework in Tasmania. On February 25, 2015, the Tasmanian Department of
Primary Industries, Parks, Water and Environment released its Final Report on the Review of Hydraulic Fracturing in
Tasmania and found, among other things, that “the potential
use of fracking in Tasmania is unknown due to the nature of Tasmania’s geology,
the size of any potential prospective area, and the lack of exploration for
hydrocarbon resources to date.”

A day
following the release of the Department’s Final Report, Minister for Primary
Industries and Water Jeremy Rockliff, conjointly with Minister for Resources
Paul Harriss, announced in a Press
Release a five-year moratorium on the mining practice of
hydraulic fracturing stating that “there is considerable concern around the
potential negative impacts of fracking, particularly within our rural
communities and farming families who rely so heavily on our global reputation
for producing premium and safe products.”

Northern Territory

The
Northern Territory government introduced a temporary moratorium on
September 14, 2016 on shale gas exploration using hydraulic fracturing to
enable the government time to examine the environmental and social implications
of hydraulic fracturing through a comprehensive independent scientific inquiry.
On December 6, 2016, the Northern Territory government announced that an Independent
Scientific Inquiry composed of ten independent scientists chaired by the
Honorable Justice Rachel Pepper would investigate the environmental, social and
economic risks and impacts of hydraulic fracturing of shale gas exploration and
development activities in the Northern Territory.

The
Scientific Inquiry released on July 14, 2017, an Interim
Report setting out some of the principal issues to be
reviewed assessing the impacts associated with hydraulic fracturing activities,
including shale gas development and management in Australia and the Northern
Territory, water, land, greenhouse gas emissions, public health, aboriginal
people and their culture, social impacts, economic impacts, and the possibility
of initiating a regulatory reform. The Scientific Inquiry stated that a final
report is to be expected by the end of 2017.

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The Center for Agricultural and Shale Law (CASL) provides information and educational programs on agricultural and shale law and policy for producers and agribusinesses, attorneys, government officials, and the general public. The Center does not provide legal advice, nor is its work intended to be a substitute for such advice and counsel.